Loans

Online Lending Firm Upstart Targets $100 Million In Funding

Online lending startup Upstart is hoping to raise about $100 million in funding.

According to Bloomberg, one source said that the California-based startup is looking to sell shares that would value the business at $500 million to $1 billion.

While a spokeswoman for Upstart said the company isn’t currently raising funds, she does anticipate completing “a final private round” over the next year. She added that the company became profitable last year, while the value of loan transactions increased threefold and gross revenue went up fourfold.

Last year, the company announced a $32 million round of funding led by Rakuten, the Japanese eCommerce company. That brought Upstart’s total amount raised to $85 million. At the time, the company said it would put the money toward future growth, as well as to help license the technology to banks, credit unions and retailers.

“It’s very similar in nature to any SaaS business; it’s the whole idea of people saying, ‘We’re not going to try to build something ourselves,’” said Upstart’s CEO Dave Girouard. “We’re strongly on the tech and data science end of the spectrum. We don’t come from financial services, as do a lot of other [lending] companies. We apply very modern data science to the question of who gets a loan and at what price; that’s the heart of what we’re known for.”

Upstart uses traditional credit reports and income, as well as data like work history and whether a customer has a college degree, to determine whether or not to approve a loan. The company also sells loan software to banks and other lending institutions.

FinTech companies were involved in a record $16.6 billion in venture deals last year, including SoftBank’s $250 million investment in lending startup Kabbage. But many investors are backing away from the online lending industry after some startups have faltered. For example, LendingClub and OnDeck Capital have both seen their share price decline more than 70 percent since going public in 2014.

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